Banks

Here at Markets and Money we run a sceptical eye over the banks, the credit market and Aussie housing regularly to make sure you’re never vulnerable to the disasters bankers get themselves into all too often.

You’ll find out why central banks don’t always know as much as they let you think. You’ll be fully informed about Australia’s ‘Big Four’ banks too. They make up around a quarter of the Aussie share market index. Thanks to their privileged position the big four will continue to be a huge force behind the market.

We’ll keep you updated on whether bank stocks should be part of your portfolio (and the times when you should take your money and run).

A lower Aussie dollar may benefit the commodity sector and other export-reliant businesses. But it also drives up prices for consumers. Because we import so many goods, a lower currency means that you’ll pay more for goods.

It’s definitely possible that the US and even Australia could lift interest rates in the future. This would cause bond prices to drop and the supply of money to contract. But even if rates were to rise 1%, rates across the developed world would still be extremely low.

Central banks have blown the biggest bubble in history. History shows us that ALL bubbles eventually find a pin. The looming collapse of the financial system will come as a huge surprise to many people. They’ve been conditioned to believe central banks can solve all problems. Nothing could be further from the truth. They are the creators of problems.

Don’t think for a moment the banks aren’t prepared. While all the political shenanigans have gone back and forth, the banks have been combing over their records to see what else is out there. When the bank executives front up, there is every chance they’ll know about, and be prepared for, whatever comes their way.

The modern system relies on trusting a third-party. That third-party is a central bank or government. Central bankers believe they can engineer asset-price inflation. That is, how much the value of assets goes up. If they control money, they can decide what it’s worth. Cryptocurrencies flip that idea around.

For centuries, we’ve relied on middlemen to be the trusted third-party. The ones overseeing the proof of identification. The people who clear the transaction. All of these people are the ones we trusted to look after the transaction process. In my view, the blockchain will out these people from their roles in a few short years.

The problem they’ve got is this. The rich can’t buy in to such a ‘small’ market without showing what they are doing this (which would push up prices out of their control). So instead they are trying to make ordinary people write it off, panic sell or fear cryptocurrencies. Or at least not compete with them to buy in. Its economics 101.

When you throw trillions of freshly-minted dollars at an economy, you’d expect a bounce in the tax take. That’s exactly what happened after 2009. But the chart shows us that something is different this time.

Perhaps we should thank these banks, though. Outdated attitudes are giving way to new ideas. The stagnant banking industry is enabling an entirely new sector to thrive. In my view, the fintech industry is going to challenge the existing banking system.

Here’s where it gets sticky for the RBA: Their metrics are saying that almost all Aussies that want work have jobs. That suggests wages should be growing. But they aren’t. The biggest factor to wages and inflation turns out to be technological disruption.

This new tax scheme doesn’t reduce US government spending by one penny. Ultimately, the money they spend has to come from the productive economy; there’s nowhere else to get it. But why should giving the rich more money stimulate output? Are they having trouble making ends meet? Do they lack capital?

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Just thought I would let you know that whilst I receive countless financial emails daily I view yours as something special. I am not looking for the same old humdrum I am looking for news that is out of left field. Now you guys would be off the planet if you went any further left but it is refreshingly different. I get through the humdrum first and get my mind sorted and save you for last as a check. It is certainly an insane moment in time but I am still finding investment opportunities. Thanks for your comments